Recent Comments

Victory!

* Anatole Kaletsky: Associate Editor of The Times* Professor Norman Stone: Professor of International Relations and Director of the Russian Centre at Bilkent University, Ankara.* Alexei Pushkov: Anchor of the most popular Russian TV programme “Post Scriptum” which has considerable influence on Russian public perception of international events.

Speakers against the motion:

* Edward Lucas: Central and Eastern Europe correspondent for the The Economist and author of The New Cold War: How the Kremlin Menaces Both Russia and the West (2008).

Thursday, November 27, 2008

THEY gripped the world, but left political philosophers yawning. According to Jürgen Habermas, a German philosopher, the revolutions that overturned decades of totalitarian rule in central and eastern Europe in 1989 were marked by a “total lack of ideas that are either innovative or orientated towards the future”.

In a sense that was right. One of the most memorable images of the extraordinary “Velvet Revolution” in what was then Czechoslovakia in November 1989 was a map showing a ladder, reaching from the depths of central Europe up a cliff, to the heights of the western part of the continent. “Zpět do Evropy” it read: “Back to Europe”.

For millions of people behind the Iron Curtain, abstract political philosophy and grand schemes had brought nothing but trouble. Vaclav Havel, whom the revolution propelled into Prague Castle as president, said his dream was to live in a “small boring European country”.

But actually Mr Habermas is wrong: a revival of the spirit of 1989 is just what both old and new Europe need. A Czech-born scholar from Harvard, Paul Linden-Retek, has recently finished a fascinating philosophical comparison between Mr Habermas and Mr Havel.

At first sight, it’s a stretch: Mr Habermas epitomises the German academic stratosphere; put crudely, his main idea is to revive and correct the Enlightenment by reviving the “public sphere” (in other words, getting people talking about decisions that they can influence). Mr Havel’s thinking is more literary than academic. He had no formal higher education (although he is much influenced by Jan Patočka, a Czech philosopher who died under secret police interrogation).

Yet both men have written powerfully against totalitarianism. Both deal with the influence of impersonal systems on modern life. Both deal with language and its uses. Both have little time for the contortions of structuralists and the like.

Mr Linden-Retek’s study shows that Messrs Havel and Habermas essentially share a critique of post-1989 politics in central Europe. Totalitarianism is gone, but milder doses of repression, apathy, injustice, and alienation remain. But Mr Habermas misses the big lesson of 1989: that politics need not be just the boring business of elites and insiders. It is, at least potentially, an exciting affair in which outsiders, even against great odds, can make a difference. Those who took part in the Orange Revolution in Ukraine or in the wild enthusiasm of Barack Obama’s campaign for the American presidency felt something of the same (regardless of the disappointment that the first has delivered and the second may bring).

Mr Linden-Retek’s mother, Daniela Retkova, was an admired aide to Mr Havel in the early 1990s. Her son’s work is well aimed and well timed to prompt an overdue discussion about the legacy of 1989. Having swallowed (but not wholly digested) a Western menu after the collapse of communism, might east Europeans now be ready to take a critical look at the political model that resulted? It is tempting to hope so.

As Ivan Krastev, a Bulgarian pundit, has noted, the model of elections contested by parties with mass membership and historically defined positions didn’t work very well even when it was braced by the cold war need to compete against communism. Twenty years on, amid huge technological, social and economic changes, it looks threadbare in both east and west: money matters too much, ideas too little. What, for example, does e-democracy (for example, wiki-style public input to lawmaking) mean for Mr Habermas’s deliberative model? Those planning next year’s anniversary festivities in Prague could do worse than to invite Messrs Havel and Habermas to a public discussion.

Boris Fyodorov, a Russian economic reformer, died on November 20th, aged 50

MOST of Russia’s super-rich spend their summer holidays on yachts in the sunny Mediterranean. Boris Fyodorov preferred visiting English country churches, the older, the better. The buildings, and especially the gravestones, fascinated him. He saw in them symbols of an historical continuity that Russia had lost under communism. Born in poverty as a factory caretaker’s son, he delighted in making discoveries among his aristocratic roots: trinkets unearthed at his family’s ruined estate, a (Polish) coat of arms. His dacha outside Moscow was notable not for pet wolves or other fashionable extravagances, but for his valiant attempts to create a weedless, stripy English lawn in a hostile climate. He flew a Russian flag there too, scandalising the neighbours, who insisted he needed a permit.

Visitors to his office sometimes wished the chairs had seat belts. Conversation would ricochet from Russia’s recent economic history to the tragedy of the aborted reforms brought in by his hero, Pyotr Stolypin, one of Tsar Nicholas II’s prime ministers. It would touch on the lamentable failure of the Kremlin under Vladimir Putin to promote proper corporate behaviour in the boardrooms of Russia’s big companies, bounce to the hypocrisy of Western bankers who failed to pay their taxes, and come to rest with a robust inquiry into the virtues of cylinder mowers compared with the rotary kind.

The chat would be in muscular, fluent English. Mr Fyodorov’s job in the declining years of the Soviet Union had included monitoring the world economy by reading the Financial Times. This had left him at ease with the jargon of the new age, and also well placed to be finance minister of Russia (still just a part of the Soviet Union) as the planned economy entered its death throes. He briefly represented Russia (after it had become an independent country) at the World Bank in Washington, and then spent a year as deputy prime minister and, for a short while, as finance minister too.

Practitioner, not politician

It was not a great success. Like several other reformers of the time, he had a firmer grasp of economics than of politics: he was too unworldly, too impatient and perhaps too cerebral for the murky world of Russian government. Even so, he helped to create, almost from scratch, a Western-style financial system with capital markets, payments systems and a semi-independent central bank. Despite the wholesale theft-by-privatisation that followed, these achievements look more impressive now than they did in the chaos of the time.

Once out of office, Mr Fyodorov published, among other books, a useful encyclopedia of financial terms. Some were recovered from pre-revolutionary Russian, others were neologisms. As a Russian patriot, however, he detested the practice of simply adapting an English word. Ofshorky (offshore accounts) was a pet hate, particularly because of its association with tax evasion. As head of the tax service, briefly, in 1998, he tried to decriminalise tax collecting, already well on its way to becoming an extortion racket, and also to broaden its reach to the rich and powerful—many of them all too familiar with ofshorky. Bravely, he set his inspectors on such prominent figures as Vladimir Zhirinovsky, a clownish extremist with connections to Russia’s rulers. He also tried to scare expatriate bankers into paying taxes on their salaries (amounting to $5 billion a year, he thought) and their local landlords into declaring the rents extracted from such foreigners ($1 billion).

Mr Fyodorov had by this time also gone into business, founding United Financial Group, an investment bank, with an American friend in 1994. Yet neither wealth, connections, nor the flashing blue light on his black limousine (a hallmark of status in Russia) made Mr Fyodorov quite typical of the elite that moved so smoothly from burying communism to embracing capitalism red in tooth and claw. On the contrary, he despised such people for their lack of scruple. Without a moral basis, he said, capitalism would just become the means by which the powerful would concentrate their wealth.

That was prescient. Mr Fyodorov’s last great cause before dropping out of public life was to try to make big Russian companies treat their shareholders properly, rather than serving the interests of bureaucrats and cronies. As a director of Gazprom, Russia’s vast gas monopoly, he attacked the practice of issuing two classes of shares, one for domestic investors and one for foreigners. That depressed the true value of the company. His own bank made tidy profits from intricate schemes through which foreigners could act as though they were Russian shareholders. Eventually, once its two-tier share system was abolished, Gazprom became one of the world’s most valuable energy companies.

But it remained one of the worst run, much to Mr Fyodorov’s disappointment. For another of his aims was to strip away the intermediary firms that loot cashflow and assets from large Russian companies with the connivance of the management. One of his targets at Gazprom was closed down as Mr Putin and his friends gained control, but others soon took its place. Mr Fyodorov used to lament the fact that even he could not find the right phrase in Russian for “corporate governance”.

East European economies crack, with Romania and Bulgaria the worst off

JUST another week’s news in eastern Europe: Latvia, after vehement denials, starts talks with the IMF; Bulgaria loses €220m ($286m) in promised payments from the European Union because of its failure to tackle corruption; and the European Bank for Reconstruction and Development cuts its growth forecast for the region by half. But the good news is that worries of a huge meltdown, from the Baltic to the Black Sea, now look overblown.

The most likely outcome is several years of low or no growth, with bigger hiccups in countries that have the shakiest financial systems and biggest imbalances. The outside world (ie, the IMF, the EU and the European Central Bank) is ready to help when necessary and—more usefully—even before problems hit markets. The ECB has opened a €10 billion credit line to Poland, which saw its currency, the zloty, fall sharply earlier this month. Hungary’s central bank was even able to cut its interest rates by half a point from the 11.5% rate that it set last month, as part of a $25 billion international bail-out. And foreign banks have stood by their subsidiaries in the ex-communist countries. It was their risky lending that inflated the property bubbles, now popped, and also financed huge current-account deficits in such places as Latvia and Bulgaria.

The biggest worries are now focused on Bulgaria and Romania, the poorest and worst-governed new members of the EU. The Bulgarians have their hands tied by a currency board that pegs the lev rigidly to the euro. That rules out devaluation to restore competitiveness, which is a concern as exports sag. It also removes a potential buffer, because the central bank cannot adjust interest rates. A current-account deficit worth a quarter of GDP looks alarming.

At least Bulgaria’s fiscal position is strong. The state has little foreign debt and runs a budget surplus. That should allow it to increase public spending as the economy slows. It can also borrow abroad (though the authorities say they have no plans to approach the IMF). The loss of some EU money is embarrassing, but Bulgaria is still in line to get €11 billion in the years up to 2013. Oriens, a Hungarian-based merchant bank that specialises in the Balkan region, reckons that growth next year will be 2.3%: low but not awful.

Romania has a current-account deficit of only 14% of GDP; a floating currency that gives it more flexibility; and is less dependent on exports to the slowing euro area than Bulgaria. But it may have a harder landing. Oriens forecasts GDP growth of just 0.9% next year. Its banking system is less profitable than Bulgaria’s. Although it is mostly foreign-owned, it looks wobblier; inter-bank rates have nearly doubled this year to 15%. Foreign reserves are scantier and the IMF reckons that the currency, the leu, may be overvalued by 19%.

Thanks to populist spending in the run-up to this week’s parliamentary election, the budget deficit may reach 3.9% of GDP by the year-end. That is not a lot by some standards, but it may still cloud outsiders’ willingness to provide more cash. Whatever coalition the election produces, serious reform is a long way off. Bulgaria’s politics are also troubling. Politicians’ ties to organised crime remain scandalous; the main populist party seems to blame the country’s Turkish minority as the economy slumps. Meltdown may have been averted, but the eastern Balkans still face bleak times ahead.

Friday, November 21, 2008

IRAN’S new medium-range missile, the Sajil, which was test-fired on November 12th, marks something of a technological breakthrough. It is fast and has a claimed range of 2,000km (1,250 miles). It might reach Moscow or southern Italy, say. Yet both Russia and Italy are opposed to American plans to place ten interceptor rockets in Poland and an anti-missile radar in the Czech Republic. The Italian prime minister, Silvio Berlusconi, has criticised the plan because it “provoked” Russia. The Kremlin has threatened to put short-range Iskander missiles in its Kaliningrad exclave (or possibly in Belarus, a close ally) if the missile-defence deployment goes ahead.

Raising the temperature even higher, Nicolas Sarkozy, the French president who (until the end of December) also presides over the European Union, said on November 14th that the American plan “does nothing to bring security and complicates things”. That infuriated his Polish and Czech counterparts, who noted that France signed up to a decision at the NATO summit in April in support of missile defence. They also questioned what business a French president had pronouncing on other countries’ security ties with America. Mr Sarkozy issued a partial retraction, saying merely that nobody should put new missiles in Europe pending talks with Russia about new security arrangements for the entire continent.

The incoming administration of Barack Obama seems unenthusiastic about missile defence as well. The president-elect says that he will support the programme “if it works”. That marks a big shift from the Bush administration’s policy, which is to deploy and develop in a “spiral” (meaning that bits would be deployed as and when they are ready).

All this leaves the Poles and Czechs who pushed for missile defence (against unenthusiastic public opinion) somewhat exposed. The Polish president, Lech Kaczynski, a strong supporter of the plan, claimed that Mr Obama had told him that missile defences would go ahead. But the Obama team issued a denial, leaving Mr Kaczynski, not for the first time, looking out of his depth. Radek Sikorski, Poland’s foreign minister, who clinched the original deal with America, flew to Washington this week to sound out potential Obama administration appointees in more detail.

Poland is interested not only in the tacit American security guarantee that a missile-defence base implies (important if NATO’s value to Poland frays because of German ties with Russia). It also won promises of American help with Polish military modernisation and of a battery of advanced air-defence missiles to protect Warsaw. If the Obama administration freezes missile defence (quite easy, given congressional hostility to the programme), other parts of the deal will be in doubt.

That is more galling since public support in Poland for missile defences has risen from 27% at the start of August to 41% after the Georgian war, when Condoleezza Rice, America’s secretary of state, came to sign the deal and toast it in Georgian wine. Some Poles feel, crossly, that Mr Sarkozy is speaking for Russia, not for them.

Mieczyslaw Rakowski, a Polish communist journalist and politician, died on November 8th, aged 81

CLUNKY cogs in the propaganda machine, communist journalists in eastern Europe were a dreary and dutiful lot. Mieczyslaw Rakowski was different. Polityka, the magazine he edited for 24 years, was the most readable official publication in the Soviet block: cogent, insightful, sometimes irreverent.

To foreigners reporting on the long slow death of the Soviet empire, Mr Rakowski was still more interesting in person, giving candid and waspish assessments of the communist regime’s political, economic and personal shortcomings. He was amusing and friendly company, at a time when congeniality was as scarce in the east as toilet paper or matches. Unlike most senior communists, he was not pompous, bullying or hidebound: you could easily believe that he was just another human being, not a defender of a system based on lies and mass murder.

Mr Rakowski did a less impressive job, however, dealing with the people who would eventually run Poland. He habitually sneered at Lech Walesa, the leader of the Solidarity trade union, calling him “Dr Walesa” in a dig at the shipyard electrician’s lack of formal education: a big deal in intellectually snobbish Poland. The Gdansk accords of 1980 gave Poland a few precious months of free public life, but broke down because of Solidarity’s demand for freedom to decide on Poland’s future, and not just to discuss it. Mr Rakowski, by then deputy prime minister and ostensibly representing the interests of the proletariat, memorably lost his temper with the workers’ representatives: “You’d be herding cows if it wasn’t for this system”—pause—“and so would I.”

In that sense Mr Rakowski symbolised Poland’s post-war story. A peasant’s son and a teenage lathe operator, he was talent-spotted by a communist regime which, installed by Soviet military force, was hungry for brain power. He rose through the system in the 1950s, at a time when Poland’s rulers struggled for wiggle-room inside the Soviet block and showed something of a human face at home. For many, the modernisation and industrialisation the regime brought were welcome, regardless of the political label attached to them.

Fried snowballs

Mr Rakowski was usually seen as an arch-trimmer, a prime example of the collaboration forced on Poland by its history. His ability to blow with the wind was best described in a scalding article (published abroad) called “The hairstyles of Mieczyslaw Rakowski”, which noted how the tousled blond locks of the youthful idealist gave way to the grizzled grey of the apparatchik. To Norman Davies, a British historian, the “crumpled faces” of Mr Rakowski and his like revealed their story: “pliable Greeks in a world ruled by cruel Roman savages, whom they serve with infinite regret and infinite agility.”

But it was not all trimming. In the 1960s Mr Rakowski publicly opposed the death penalty, then a heretical and dangerous stance. His finest hour came in 1968, when a quarrel between two factions in the communist party bubbled over into a public anti-Semitic (ostensibly “anti-Zionist”) frenzy. Mr Rakowski stood firm and refused to sack any Jews. Asked to reprint a pre-war article critical of Jews, he refused, saying their ashes were “scattered in the fields around Auschwitz”. Many Poles thought their Nazi and Soviet tormentors were two sides of the same coin; it was remarkable for a senior communist to agree in public, even in part.

But unlike some, he did not leave the party, either then or after martial law was imposed in 1981. With scores killed and thousands jailed, Mr Rakowski became the right-hand man of the country’s new military leader, General Wojciech Jaruzelski. He was ambiguous about whether he still truly believed in a democratic form of communism; Leszek Kolakowski, the exiled philosopher, rightly described that as “fried snowballs”. Mr Rakowski preferred to argue that communism protected Poland from the Soviet Union, whereas full-scale opposition would be futile. The anti-communist fighters had died in the forests; the pre-war government, in exile in London, was a husk; the Catholic church was a reactionary force. If history had placed Poland in the communist camp, then hope lay only in being its happiest barracks.

Mr Rakowski’s great ambition was to lead the communist party. He eventually became first secretary (as the job was called), but he was last as well as first, acting as the party’s undertaker in 1989 after the round-table talks paved the way for freedom and true independence. Usually celebrated as an unalloyed triumph, that transfer of power had its drawbacks. Privatisation, launched by Mr Rakowski in the dying years of communism, had allowed influential insiders to start turning power into money to safeguard their positions. Dodgy foreign trade outfits, linked with military intelligence, flourished. Party funds that Mr Rakowski had shipped out of the country returned (via a KGB courier) to launch a new post-communist party.

Mr Rakowski’s career fizzled out, fittingly, in an abortive bid for the Polish senate in 2005. His successful opponent was Radek Sikorski, now foreign minister, who had fled Poland as a political refugee from the martial law that Mr Rakowski so steadfastly defended.

The European Union’s thinking about corruption goes roughly like this. It is a problem for governments, chiefly in the new member states. The best way to fight it is by making entry into the EU conditional on progress. That will create the political will which must, sooner or later, bring results.

That approach is not working. Anti-corruption efforts have stalled or reversed. Countries such as the Slovenia, Romania, Latvia and the Czech Republic have closed down or weakened their anti-corruption offices. Efforts by the two newest members, Romania and Bulgaria, are ineffective. Croatia, though gripped by a ghastly outbreak of gangland violence, is moving swiftly towards the EU.

The real story is that the prospect of EU membership encourages elites to pay lip service to the anti-corruption cause, but no more than that. Once the conditionality is gone, the pressure stops.

Efforts to train officials and create the right sort of structures in ex-communist countries seem to have little or no effect. In a phrase familiar from western development efforts in non-European countries, “the solution is the problem”: in other words, the agencies and officials being entrusted with the means to fight corruption are just as bad (weak, corrupt or incompetent) as the people that they are supposed to be policing.

Those who do try to change things risk being fired, not promoted. Corruption-fighters such as Romania’s Daniel Morar or Slovenia’s Drago Kos are relying increasingly on support from outside to hang on to their jobs.

Awareness campaigns are not the answer: the public is already highly aware of the level of corruption, having first-hand experience of it. Such campaigns stoke a sense of futility: Eurobarometer opinion surveys show that easterners are increasingly disillusioned with the ethical standards of their elected representatives and public servants; west Europeans are morose about the same public officials as well as the impact of corruption on the EU as a whole.

These gloomy ideas—as they came to light in a “lessons learned” workshop at the recent International Anti-corruption Conference in Athens—should give EU decision-makers cause for serious thought. One of the organisers, Alina Mungiu-Pippidi, of Berlin’s Hertie School, argues that in some new and future member states corruption is not seen as “a mostly individual infringement of a norm of government fairness and impartiality” but as the opposite: the normal way of distributing public services; to friends, allies, clients and bosses. Using judicial punishments against something that is largely regarded as normal behaviour (at least among the perpetrators) is unlikely to work. Nor are outside watchdogs such as OLAF, the EU’s in-house fraud-busting outfit, likely to get to grips with the problem, given their assumptions of “perfect functioning of the rule of law and of impartial bureaucracy”.

One answer is to set up a much better means of measuring anti-corruption efforts. The existing benchmarks focus on the creation of formal institutions, not on their impact. They also create an unhelpful mixture of smugness in some countries (“What us, corrupt? No way—try next door!”) and paranoia in others (“Why pick on us? What about them? And you?”). It would be good if new yardsticks included all the EU members, not just the new and future ones.

Perhaps the EU needs a commissioner for anti-corruption, or a special envoy, to be directly responsible for following up on commitments made during the enlargement process.

But the best approach is to use the expertise that can be found outside government, particularly in the voluntary sector. The enemy of corruption is public-spiritedness; the stronger that gets, the greater the chances of both constraint and redress. It is as simple—and as complicated—as that.

Designed to keep the Germans down, the Russians out and the Americans in, NATO will celebrate its 60th birthday in 2009 in a sorry state. Its campaign in Afghanistan is not going well. Its members are at odds about how to deal with Russia. But look north and the European security picture will be brightening.

Sweden and Norway, once prickly friends, are striking up a new defence relationship. This might look odd: Sweden is non-NATO and a member of the European Union; Norway is a keen member of NATO, but has stayed out of the EU. But now those differences are being set aside. Co-operation on airspace monitoring, combined military procurement, joint training and co-ordinated intelligence work will all be bearing fruit in 2009.

Panting to catch up is Finland, neutral in theory but in practice also spooked by an increasingly assertive Russia. That's clever psychology by the Norwegians and Swedes: Finland would resist if it felt pressured to join in. But it hates being left out of anything its Nordic neighbours get up to. For the core three, 2009 will bring calls for higher defence spending and new efforts to extend Nordic security co-operation to other countries.

The two pressing tasks for the new Nordic security partnership (don’t call it an alliance, or you will get a very chilly Scandinavian scowl) are to work out how to help the Baltic states, and to make plans for what they call the “high north”, the energy-rich area that lies between Europe and the North Pole. The Baltic states (Estonia, Latvia and Lithuania) have been full members of NATO since 2004. But the alliance has made no plans to defend them, not wanting to break the taboo on counting Russia as any kind of threat. That will change in 2009, as NATO’s bureaucracy in Brussels works out the practicalities.

But no NATO efforts to defend the Baltics in a crisis make sense without help from Finland and Sweden. As EU members, they will offer political support. And Sweden’s airspace would offer the best way to bring reinforcements if needed. The Baltics will be keen to join in the new Nordic nexus, starting with airspace monitoring.

America is watching the Nordic efforts with increasing interest, as is Canada, once a peace-monger but now deeply alarmed by Russian adventurism in the Arctic. Add Britain for good measure, beef it up a bit, and this could turn into a handy new outfit to deal with the hot­test spots of what some people are calling the new cold war. All it needs is a snappy name. What about the Nordic Atlantic Treaty Organisation?

Monday, November 17, 2008

Five 600-words pieces mainly about Estonia from the economist.com "correspondent's diary" slot

Estonia

In the eye of a Baltic stormNov 14th 2008From Economist.com

Prosperous but uneasy on Russia’s border

Monday

“ESTONIANS OUT OF SIBERIA—SOVIETS OUT OF ESTONIA”. Amid the protests against the imposition of martial law in Poland in 1981, that slogan—on a banner carried by two elderly émigrés outside the Polish embassy in London—stood out as seemingly the most lost of all lost causes. True, Britain, like most other Western countries, recognised Estonia, Latvia and Lithuania as still existing de jure, but de facto, they were occupied by the Soviet Union and likely to remain that way for the foreseeable future. Britain had even handed over to the Soviet authorities the Baltic gold reserves entrusted to the Bank of England for safekeeping by the pre-war governments. Complaining about the occupation inside Estonia meant arrest and deportation. In the outside world, it just looked futile.

Undaunted by this gloomy prospect, your diarist promptly hitched himself to the Baltic cause, spending many of the years since then living in, travelling to, and writing about the Baltic states. In 1990, he received Lithuanian visa 0001, issued by the authorities there in defiance of Soviet border controls (he was deported from the Soviet Union a week later). In the years that followed, he lived there and edited a newspaper. His eldest son was born in Tallinn Central Hospital—the first baby from a Western country to be born in Estonia since the Soviet occupation of 1940.

So a few days in Tallinn recently offered the chance both to reflect on the past and to worry about the present. In both cases the picture is mixed. The humming streets of the Estonian capital, now dotted with skyscrapers and clogged with large western cars, epitomise a return to prosperity and freedom that on that cold December afternoon in 1981 would have seemed as unimaginably miraculous as Atlantis re-emerging from the waves.

Indeed, Estonia’s success has excited other countries. President Mikheil Saakashvili of Georgia, for example, is a huge fan of Estonia, and based his policies of deregulation, low taxes and privatisation explicitly on policies pioneered by Estonia in the 1990s. Scores of Estonians have spent time in Georgia, advising on everything from anti-corruption efforts to spy-catching.

The temperaments could hardly be more different: Estonians are reserved, unhierarchical and efficient. That makes them excellent team players—one reason why Estonia’s public institutions are the strongest and cleanest in the ex-communist world. Georgians, by contrast, are emotional, status-conscious and individualistic. This leads to a rather different style of work, to put it mildly. But opposites attract: Estonians and Georgians get on splendidly (much more so, in fact that either country does with its immediate neighbours).

But Estonia’s enthusiasm for “Misha” Saakashvili is now dented, partly because of distaste for some of his policies, and also because of what is seen in Tallinn as his scaremongering. After the war in Georgia, he proclaimed that “the Baltics are next”. Although Estonians and their neighbours are glad to have international attention for their problems with Russia, they are not happy about being bracketed with Georgia. “We are members of NATO and the EU; they are not. Misha’s wild talk makes it sound as if we are as crazy and vulnerable as they are,” said one official frostily.

Tuesday

THE skies over Estonia are full of American and Danish warplanes conducting a large exercise involving mid-air refuelling. It is the biggest such drill ever to take place in Estonian airspace. That is a sign of how NATO (and especially America) is already devoting more attention to Baltic security.

When Lithuania, Latvia and Estonia joined the alliance, Russia was officially not a threat; indeed, it was a NATO partner. So NATO’s presence in the Baltic states has been minimal, just a few fighter planes, supplied by a rota of other NATO countries, based at an airfield in Lithuania. The alliance bases its contingency planning on threat assessment: and if Russia is not a threat, then what is there to plan?

NATO membership for the Baltic states had excellent effects on many fronts (your diarist remembers the alarming days when excitable militias in both Lithuania and Estonia mutinied because they disliked the politics of the defence ministries). The Baltic states are far more stable, prosperous and predictable neighbours for Russia now than they were when they first regained independence. But the reverse is not the case. Russian warplanes have probed Baltic airspace to see if the foreign fighters would bother to scramble (first they didn’t; then they did; the provocations stopped). Across the border in Pskov, Russia’s most modern army units regularly practise intervention and reconquest of what some Russian politicians see as their country’s renegade Baltic provinces.

Since the war in Georgia, that has been changing. America’s top commander in Europe has specifically said that the alliance needs to work out new contingency plans to protect the Baltic states. Estonia is working out a new defence plan of its own, highlighting the need not only to engage in operations far afield (Estonia has more than 100 troops in Afghanistan) but also to protect the home front.

That will mean more anti-aircraft and anti-tank weapons, and more robust radar systems. NATO’s planning machinery is lumbering into action; the threat assessment in 2009 is likely to take formal note that Russia—perhaps not under this regime but another, nastier one—could be at least a potential military threat to alliance members such as the Baltic states and Poland. In practice, this will mean making sure that enough NATO resources—troops, helicopters, ammunition—are available in Europe for use at short notice. That will mean less for other places: not a costless policy.

NATO is also raising its visibility in the Baltic states; more exercises are planned. NATO’s cyber-defence centre is in Tallinn, and although it is not fully operational yet, it is already attracting inquiries from countries as far away as South Africa and India. A cyber-attack on Estonia in April 2007, during riots about a Soviet war memorial, failed to do much damage—Estonia is one of the most wired countries in Europe—but caused consternation in Washington, DC and elsewhere. An official speaks darkly of the possible threat created by countless billions of microchips in devices from cars to household dryers, increasingly networked but largely unsupervised. He highlights four levels of threat: disruption of the public internet; defacement of websites; theft of data (such as banking or passport details) and—worst of all—the hijacking of critical computers and introduction of false commands. That could shut down a nation’s power supply, telephone exchange or financial system.

The new centre is more of a think-tank than an operational outfit, but its experts are already in demand in other countries: two Estonians rushed to Georgia when, as war broke out, that country’s government websites were replaced with images of Hitler. Welcome to the world of cyber-commandos.

Wednesday

YOUR diarist breakfasts with an Estonian who has just been on an extended stay to Lithuania. The Baltic states have little in common apart from a tragic history and geographical proximity, so it is rare to find a local who knows all three. The Lithuanian hosts had tested their guest’s sense of humour with a barrage of jokes, mostly reflecting Estonians’ perceived icy reserve and inconsiderateness. A hitchhiker flags down a car and asks “Is it far to Tallinn?” After two hours, the driver replies, “It is now”. What really riled the Lithuanians, however, was when they asked their guest to tell some anti-Lithuanian jokes. “We don’t have any,” he replied dryly—perhaps unwittingly, if quite unfairly, confirming the stereotype of Estonians as smug and humourless.

The next appointment is a seminar for Estonian journalists about the Russian media—or as it should in most cases be called, the Kremlin propaganda machine. It is surprising that an outsider’s view is needed, but young Estonians don’t read Russian as fluently as their older colleagues. The Estonian media, especially its online bits, tend to react unthinkingly to “news”. A recent book by an obscure Finnish academic, claiming that Estonia will shortly be reincorporated into the Russian Federation, made front-page news. So did a report (which proved to be bogus) that two Estonian farmers were launching a campaign for the restoration of the “Estonian Soviet Socialist Republic”.

Yet another speaker showed why Estonians have some reason to feel paranoid: he produced a selection of Russian-language books bought at the main railway station in Tallinn, all containing outrageous falsifications of history and deeply xenophobic and threatening material towards Estonia and its neighbours. Stalin’s deportation to Siberia of the entire surviving Estonian elite, for example—many thousands of people arrested at midnight, given a few minutes to pack, and herded into cattle trucks—is in one book portrayed as an entirely reasonable response to Estonian “war crimes”.

The really worrying question is how much of this stuff Estonia’s own ethnic-Russian population believes. Your correspondent gives an interview to Estonian television urging the authorities to put more resources into Russian-language broadcasting.

In pre-war Czechoslovakia, the situation was broadly similar. Patriotic Czechoslovaks opposed German-language radio broadcasting because they believed the Sudeten Germans should learn Czech; if they wanted to listen to German programmes, they could listen to the ones from Germany itself. They did—and by the time the authorities in Prague realised their mistake, they had lost their fellow-citizens to the Nazi propaganda machine.

Most Baltic Russians watch Russian television these days—it is lavishly produced and highly watchable. Estonia and Latvia have a huge asset in the form of hundreds of thousands of ethnic Russians who have seen what life in a free society is like; many have learnt the once-despised local languages and acquired citizenship. But the authorities—still twitchy about anything that might blur the lovingly cherished national idea, have been culpably slow in making use of all their citizens. The price for that could be horrendous.

Thursday

The hottest topic in Tallinn right now—and one that no Estonian official wants to talk about, even on deep background—is a spy story. The only detail to have come out publicly so far is that a senior official at the defence ministry has been arrested and charged with spying for an unnamed foreign power (read: Russia). The Russian media is using the incident to push the idea that Estonia is a stooge for Western intelligence, and an unreliable one at that.

The ex-official is of course innocent until proven guilty, and it is right not to prejudice his trial by leaking information to the press. But some general points deserve to be made. One is that it is not much of a triumph when your spies get caught. Russia’s GRU (the formidable military-intelligence service) must be enjoying the humiliation of their great rivals, the snooty SVR (foreign-intelligence service), whose sloppy tradecraft seems to have let a prized asset fall into the hands of the enemy. Conversely, it is a healthy sign when you are an interesting enough country to be spied on, when your counter-intelligence service is smart enough to catch spies, and when you are bold enough to put them on trial rather than hushing things up. Not all NATO countries can make that boast.

Another interesting story on similar lines concerns a bunch of Irish republican extremists who were lured into a sting operation in Lithuania. Some leaders of the “Real IRA” had developed romantic attachments to Lithuanian women. Neat work by British officials and their Lithuanian colleagues created a few fake arms dealers—the basis for an elaborate sting operation in which the Irish gunmen found themselves, investigators say, caught red-handed trying to buy weapons to continue their terror campaign. Few details have come into the public domain yet. When they do, the story should help improve Lithuania’s slightly threadbare image in Britain.

The other big news today is that a recently retired Finnish military commander has written an article publicly supporting his country's membership of NATO. Finland is important to Estonia: their languages are closely related; the national anthems are sung to the same tune. After Estonia regained independence (and to some extent even before), Finland played a big role in modernising Estonia's reborn public administration.

But Finland is not in NATO, and the country’s current president, Tarja Halonen, has infuriated Estonians by saying that they suffer from “post-traumatic stress disorder” and should take a calmer attitude to Russia. That view is not shared by people in the formidable Finnish military and security establishment, who have been keeping tabs on Vladimir Putin since his days in Leningrad, when he and some associates developed a profitable relationship with some parts of Finnish society.

Another addition to the pro-NATO camp in Finland is Martti Ahtisaari, who has just won the Nobel peace prize for his work in the former Yugoslavia. All that is highly welcome in Tallinn, where officials also note the hawkish attitude of the Swedish government, and the intensifying military cooperation between the three big Nordic countries. But relations with the northern neighbour, though close, will never be quite cordial.

The Estonians think the Finns are a bit too taciturn, as this jokes illustrates. A Finn and an Estonian take a sauna together. After an hour spent in amicable silence, the Estonian produces a bottle of vodka and pours two glasses. “Terviseks”, (“Cheers”) he says. The Finn glowers. “Are we here to talk or to drink?” he asks sternly.

Friday

ESTONIA has been a hotbed of freemarket thinking, home of the flat tax, deregulation and privatisation in a way that puts other ex-communist economies to shame. But as the financial hurricane in world markets whips up the seas on the eastern Baltic, it is clear that the many pluses of those policies are matched by minuses.

Air travel, for example, is getting worse rather than better. Profit-maximising foreign airlines choose the cheapest slots for routes to small countries, not the most convenient one. Flying to Estonia from London means either leaving home at 3:30 in the morning, or arriving in Tallinn after 11:00 at night. Flights to Brussels and other European capitals are barely more convenient. The result is a subtle form of isolation—nothing like as bad as the Iron Curtain, to be sure, but a nuisance nonetheless.

A more serious vulnerability is that Estonia has sold all its banks to foreign buyers. In 1993, the newspaper in which your correspondent was the majority shareholder lost all its money when a locally-owned bank went bust. After that, selling the financial system to solid Swedes and Finns seemed by far the best way ahead. It would allow Estonian companies to borrow freely with the least danger to the country’s external financial stability. Coupled with the pegging of the newly reintroduced national currency, the kroon, to the Deutschmark (now the euro), Estonia willingly locked itself in an economic straitjacket: the only way ahead was ever-higher productivity and fast export growth.

That worked pretty well at the time. When the kroon came in, Estonia pledged its gold reserves and even its state-owned forests to support the new currency. Your correspondent and his colleagues threw away their old wallets, in order that the pristine new currency would not be tainted by even indirect contact with the despised Soviet banknotes—known dismissively as “occupation roubles”.

But later, the same arrangements stoked a property bubble. Estonians took out huge mortgages, confident that prices could only go up. When they plunged in 2007, building contractors went bust and economic growth halted. There is not much the government can do about that.

Now the worry is whether the foreign-owned banks will stand by their local branches and subsidiaries. In theory, they should. The Baltic region has been a hugely profitable and fast-growing backyard for Nordic investors of all kinds; it would be insane for them to abandon ship now.

That is the theory, and for now at least it seems to be holding. From outside, the Baltic economies may seem vulnerable and beleaguered; inside, there is a sense of calm. Indeed, some think that the downturn will prove rather beneficial. “Happiness is not just about money” was a slogan in the last election campaign, held at the height of the boom. As Estonians get used to (slightly) higher unemployment and shrinking demand, it is worth bearing in mind that today’s problems would have seemed like unimaginable good fortune only 20 years ago.

It is in that spirit that your diarist finishes his trip, giving a talk at a conference to mark 90 years of Estonia’s diplomatic service. For the majority of that period, the diplomacy was frozen: the task between 1940 and 1991 was survival, rather than active management of international affairs. All Estonia’s prewar diplomats were executed by the Soviet authorities, except for those already abroad, who were issued death sentences in absentia.

In the 1990s, Estonia’s brightest and best young people flocked to the foreign ministry to start work on making independence a reality—something that culminated in Estonia’s membership in the European Union and NATO. Now the foreign ministry seems rather underpowered—the burning, urgent patriotism that fuelled it is no longer needed. Long may that continue.

Thursday, November 13, 2008

DETAINING the next president of the United States for three hours in what an eyewitness called a “malodorous” small room at an airport in the provincial Russian city of Perm looks, in retrospect, to have been a pretty bad idea. No matter that the Kremlin muttered an apology for delaying Barack Obama, along with his mentor on the Senate Foreign Relations Committee, Richard Lugar, in August 2005. The hold-up was blamed on a muddle over paperwork—although some Russia-watchers suspected it was a calculated Kremlin snub to the Republican Mr Lugar.

Mr Obama now plays down the episode, but his first-hand experience of the Russian bureaucracy’s capacity for at best capricious incompetence and at worst vindictiveness could yet prove telling. His team of hundreds of foreign-policy experts ranges from those who see the Bush administration’s policy as dangerously confrontational to those who think it too soft. Michael McFaul, a Stanford academic who has become a caustic critic of the Kremlin, is an influential Obama adviser. But it remains to be seen how many people Mr Obama will pick from his own team, and how many from the Hillary Clinton camp of experienced Russia hands.

The Democratic Party is in general rather less hawkish than many of Mr Obama’s senior advisers. Yet the prosaic truth is that, whoever secures the top jobs in the new administration, American policy towards eastern Europe is likely to be shaped mainly by events and bureaucratic drift, not personalities. Barring a new crisis (such as another war in Georgia), eastern Europe is unlikely to get anything like as much attention as the economy. Even more conveniently, the main decisions can easily be fudged or postponed.

Thus the Bush administration is still trying to push for Ukraine to be given a clear path towards future NATO membership. It reiterated this at a recent high-level NATO-Ukraine meeting in Estonia. But if Mr Obama wants to cash in his popularity in Europe, he is more likely to do so by asking European countries to send more troops to Afghanistan, not to swallow their objections to NATO membership for two increasingly unconvincing candidates: a chaotically divided Ukraine and an erratic, indefensible Georgia.

An Obama administration may concentrate on the nitty-gritty of military reform in the Ukraine rather than grand promises of NATO membership. That would be welcome in Russia. So too might be Mr Obama’s rather more doveish line on nuclear weapons. But another sore point with the Kremlin is America’s plans for missile defences, and especially for the siting of ten interceptor rockets in Poland and a radar in the Czech Republic. These—if they work—might stop or deter an Iranian missile attack on America or Europe. But public opinion in the Czech Republic and Poland remains unenthusiastic. And Russia has now threatened a bunch of countermeasures, including putting nuclear-capable missiles in the Kaliningrad exclave and targeting the missile-defence installations with its own nuclear arsenal.

Mr Obama, like many Democrats, sounds sceptical on missile defence. With no money allocated to the programme by Congress, it will be easy to keep the plans alive on paper, but to do little to promote them in practice. And if talks with Russia about nuclear weapons do go ahead, a deal on missile defence might be thrown in. Czechs and Poles may feel a touch queasy as these issues are discussed over their heads; but there is little they can do about it in practice.

Nor is it likely that an Obama administration will fight hard for greater European independence from Russia’s monopoly of east-west gas pipelines. The Bush administration promoted Nabucco, a pipeline that would bring Caspian and Central Asian gas to Europe via Turkey. But a shambolic and inattentive European policy on pipelines and energy dependence in recent years has left policymakers in Washington feeling that they are wasting their time. If the Europeans cannot look after their own interests, why should America?

FOUR comforting bits of conventional wisdom are as follows: 1) Russia has no ideology; 2) if the system there features distinctive political ideas at all, they are merely the same as western ones, but tempered by pragmatism; 3) the financial crisis will accelerate normalisation, rather than entrenching eccentricities; 4) any odd-sounding notions such as “sovereign democracy” are rhetorical flourishes for domestic consumption only.

Certainly some facts support this. Marxism-Leninism was a serious affair, with its roots in a recognisable branch (or dead-end) of 19th-century German philosophy. You could take academic exams in dialectical materialism. (Remember the laws of “negation”, “transformation” and “opposites”?) Marxism in its more modern form influenced, for better or worse, western academic thought in everything from literary criticism to sociology.

The thought patterns (to describe them as neutrally as possible) swirling round the upper reaches of power in Russia are a pale shadow of that. Strands of Soviet and Tsarist nostalgia, coupled with an affection for the corporate state that Mussolini would have recognised, make a confusing and confused mixture.

One might speak of dogmas and historical paradigms, but not a formal ideology. Moreover, some Kremlin spin doctors insist that no real difference exists between Russia and the West, other than the dislocating effects of historical interruptions. And the urgent questions now are practical, not theoretical. The fetid pools of Russian exceptionalism offer few clues about how high the central bank should raise interest rates to defend the rouble.

For a counter-argument to this comforting picture, consider the arguments of Viktor Yasmann, a veteran analyst at the American government-financed Radio Free Europe/Radio Liberty. Mr Yasmann’s central exhibit is a remarkable best-selling book called “The Russian Doctrine” (Russkaya doktrina).

Published in 2007 by the pseudonymous Mikhail Kalashnikov and a group of 50-odd people drawn from the security services, think-tanks, the media and the Russian Orthodox Church, this 800-page tome is in effect a revanchist manifesto. It outlines how Russia can regain predominance in the Eurasian landmass, drawing on both imperial Russian and Soviet-era traditions. The existing political system is dismissed as convenient camouflage, behind which a new order is taking shape, featuring, among other things, an “aristocracy” of ex-KGB people. Ideas such international law, the separation of powers and human rights get similarly short shrift.

It makes pretty horrible reading. But Mr Yasmann contends that these ideas are affecting mainstream Russian politics. He says the doctrine has “already become the agenda of the Putin-Medvedev leadership” and that it may also prove appealing to corrupt authoritarian regimes elsewhere in the ex-Soviet world.

But the popularity of the book, the credentials of its authors, and the presence of some of its themes in speeches by Dmitri Medvedev and Vladimir Putin do not of themselves prove Mr Yasmann’s case. So far, the “doctrine” does not seem to be producing the desired (and promised) national resurgence. Progress on infrastructure, public services and demography—to take just three indicators—has been dismal. Secondly, corruption and chauvinism are incompatible except in an era of easy money. That seems to have come to an end.

That is not to say that the “doctrine” will be dumped. The economic crisis is more likely to make it evolve—and not necessarily into something more palatable. As Western policymakers grapple with this, they may note that their task is complicated by neglect of Russia-watching capabilities in officialdom. For years, hawkishness towards Russia (or indeed any knowledge of it at all) was a near career-breaker in many countries’ government service. It is lucky that people like Mr Yasmann stayed on their watch.

Thursday, November 06, 2008

FROM the published information, it hardly seems like a big deal. On September 21st Herman Simm, a middle-ranking civil servant in Estonia’s defence ministry, was arrested, along with his wife, and charged with spying for an unnamed foreign power. Mr Simm has made no public statement and his lawyer has not responded to requests for comment. Estonian officials flatly decline to discuss the case. But it is likely to come to court next year. If convicted, Mr Simm faces a jail term of between three and 15 years.

Some of the case’s details are startling. Mr Simm was already sidelined at the time of his arrest. But his previous job had been ultra-sensitive: he set up and ran the system for handling all classified information—including top-secret documents from Estonia’s NATO allies. He had been responsible for handling security clearances for Estonian officials in the military, security and intelligence services. A foreigner who is familiar with the case talks of “a potential European equivalent of Aldrich Ames” (once Russia’s top spy in America, who for years headed a CIA counter-intelligence department and is now serving a life sentence in jail). That could make this the worst NATO security breach to have happened for many years.

More intrigue surrounds the mysterious disappearance, at about the time of Mr Simm’s arrest, of a contact who is an Italian-employed Spaniard. This person is thought to have been an “illegal”: a Russian spy infiltrated into Europe via Latin America, using a carefully constructed false identity, and able to operate all round the European Union without suspicion. Such “illegals” are the crown jewels of foreign intelligence work: their bogus identities are complex and expensive to arrange, and they usually handle only a single source. But in what appears to have been a bad bit of espionage tradecraft by Russia’s foreign intelligence service, the SVR, this Spanish citizen contacted another highly placed source in a different NATO country and made slightly clumsy attempts to recruit him. The subject reported the encounter, setting in train the investigation that led to Mr Simm’s arrest.

A huge damage-control operation is now under way to work out what Mr Simm knew or had tried to find out. The security clearances he issued and denied, and any personnel moves resulting from them, are also under review. And security officials across Europe are busily checking the elusive Spaniard’s recent movements for other clues about clandestine activities. They are also following up the paper trail that brought him such an apparently convincing identity as an EU citizen.

The affair has raised many other questions. The Russian media are jeering that the Baltic states are not only Western stooges, but incompetent to boot. Yet the consensus in the world of shadows is not that new members of NATO such as Estonia are unreliable. On the contrary, Estonia’s intelligence and security services are well-regarded, which makes them a worthy target for foreign espionage. It was good counter-intelligence work that led to the arrest. And in most NATO countries, notes a seasoned Baltic-based spook, such scandals are usually hushed up, not prosecuted so gutsily.

FLAMES out, but smoke still rising. That is how eastern Europe looks after huge outside intervention to douse worries in debt and currency markets. An IMF board meeting on November 5th approved a lightly conditioned $16.5 billion bail-out for Ukraine. Austria has offered a €100 billion ($129 billion) package for its banks, which are owed $290 billion by east European borrowers: Erste Bank took up a €2.7 billion equity injection on October 30th. In Hungary, which has also received an IMF bail-out, markets firmed as parliament passed a tough fiscal package, based on an expected 1% fall in GDP. Serbia, which is in talks with the IMF, said it would not need extra cash, though it might draw on its $695 billion deposit at the fund.

In London Latvia’s central-bank governor, Ilmars Rimsevics, sought to quell fears that his country faced a meltdown on Icelandic lines.Flanked by representatives of Swedbank and Nordea, two Nordic banks which own a large chunk of the local banking system, he said Latvia’s currency peg to the euro was not in doubt. Unlike Iceland, Latvia has little external public debt and a thinly traded currency. But questions remain over some locally owned banks and the legacy of reckless fiscal policies (described by one minister as “hitting the gas pedal”). That brought double-digit growth, but did little for competitiveness. The coming months could bring a contraction of up to 5% in Latvia’s GDP.

The intricacies of Latvian economic policy may no longer hold foreigners’ attention. “We were getting a lot of calls about the Baltics and Scandinavian banks a couple of weeks ago. Now attention has shifted to Bulgaria,” says Neil Shearing of Capital Economics, a consultancy. Bulgaria has a large current-account deficit (expected to be 24% of GDP this year). So far, this has been filled by inflows of foreign direct investment. That looks good on paper (it is reliance on short-term borrowing that sets red lights flashing). But up to a third of that money went into property, inflating a bubble that has now popped.

Neighbouring Romania, the poorest country in the European Union, has problems too. Standard and Poor’s, a rating agency, downgraded its debt to junk last month. And the slowdown in “old Europe” will hit remittances from the many Romanians working abroad.

Foreign investment flows to eastern Europe may be shrinking too, now that businesses in the rich half of Europe have less cash to spare for foreign expansion. Having neglected competitiveness-stoking reforms in education, infrastructure, and public administration, ex-communist countries may find it harder to attract companies needing to cut costs. Governments in eastern Europe are now hurrying to adopt the macroeconomic policies necessary to speed the adoption of the euro. But their countries’ deeper problems remain.

IMAGINE, suggests Philipp Blom, that a “voracious but highly selective plague of bookworms” had deprived us of all knowledge of 20th-century history after 1914. How would the early years of the last century look when taken on their own, rather than overshadowed by the cataclysm of the first global war?

Seen against the backdrop of what followed, the period 1900-14 was a golden evening of civilisation: a time of social stability, peaceful international relations, political reform and economic integration, leavened by startling technological and cultural progress. Yet as Mr Blom argues in his masterly and panoramic history of Europe in the pre-war years, to the “nervous generation” actually living through it, the era felt rather different. For them it was a time of jarring uncertainties, when solid 19th-century conceptions were corroded and eroded. Rudyard Kipling had mourned the already visible (to him at least) fading of British imperial power in his hugely popular “Recessional”. Matthew Arnold, whom Mr Blom quotes in the same passage, wrote of “the long, withdrawing roar” of declining religious faith in his poem “Dover Beach”.

Scientific notions such as radioactivity, and the spooky new business of X-rays, were turning things upside down too. So were philosophers such as Bertrand Russell and Ludwig von Wittgenstein. “If scientific analysis made the world fall apart, philosophical reason poured acid over the remaining truths,” argues Mr Blom. But out of those uncertainties came the age in which we live now.

Mr Blom musters a rich array of details and sources to bolster his argument. His book gives a chapter to each year, stitching together developments in the German-speaking world (his forte) as well as neurotic France, reactionary Russia and self-confident Britain. His themes range from sex to science, from high politics to gruesome crime, from advanced art to popular literature, all dotted with entertaining nuggets of court and other gossip. As the reader reaches the economic and social decline of the English aristocracy after the death of Queen Victoria, it helps to be told that the libidinous King Edward VII was known as “Edward the Caresser” by his disrespectful subjects. Fans of Marcel Proust will be intrigued to know that the French literary titan was obsessed with motorcars: what would now be termed a “petrolhead”. And who will see Walt Disney’s “Bambi” with the same eyes in the knowledge, waspishly passed on by Mr Blom, that his creator, Felix Salten, was the anonymous author of a notorious pornographic novel?

It is a slight weakness of the book that smaller countries are almost ignored. As the narrative sweeps between the great powers of Europe, the reader is left wondering what happened in, say, the Netherlands (then still an empire), in Sweden or in Italy. A second criticism is a possible over-emphasis on sex. The era was indeed marked by an unbuttoning of Victorian sexual mores, by the activities of some brave if marginal feminists (such as the British campaigners for women’s suffrage), by increasing female employment and by a decline in the importance of male muscular strength. It is interesting to see problems ranging from naval shipbuilding to public health viewed through the prism of sexual angst. But it is quite a leap to maintain, as the Vienna-based Mr Blom does, that “all instinct is ultimately sexual.”

A third and more substantial point is that much of the then newfangled thinking that Mr Blom describes would have been regarded by most people at the time as deranged, freakish or irrelevant. Sigmund Freud, Friedrich Nietzsche, Virginia Woolf and Rudolf Steiner all had their followings; their popularity casts revealing light on the cultural and intellectual needs of the time. Their ideas are interesting even today. Yet in his excitement to portray the shock of the new, Mr Blom risks neglecting the fact that the previous century had left a solid legacy. For most people, it was that world—orderly, patriarchal and even devout—that still dominated daily life.

That should not deter the reader from enjoying Mr Blom’s impressive and thought-provoking book. His particular gift is to encapsulate complex historical and biographical events pithily and in an illuminating context. The story of Belgium’s monarchical colonists in the Congo is a gruesome tale of inhumanity (the bit about children’s hands being amputated to punish their parents for slow work is not easily forgotten). It is aptly compared with German and British behaviour in southern Africa. But it also gives the chance to explain how Edward Morel and Roger Casement launched what was, in effect, the first international human-rights campaign, using the mass media to bring an unstoppable torrent of public criticism to bear on the Belgian authorities.

The book brings the fears, enthusiasms and blindspots of the period brilliantly to life. If civilisation lasts another 100 years, perhaps an equally talented historian will one day compare the first decade of this century to its dizzying counterpart before 1914. If so, Mr Blom’s book is unlikely to be bettered as a source.

AFTER the Russian-Georgian war, Britain stood out as the only big European country willing to talk tough to the Kremlin. On August 27th in Kyiv, David Miliband, the foreign secretary, berated Russia for its “unilateral attempt to redraw the map” and spoke of “the moment when countries are required to set out where they stand”. Britain was a big part of a coalition—which also included Sweden, Poland, the Czech Republic and the Baltic states—that stiffened the European Union’s position on freezing talks on a new partnership and cooperation agreement with Russia.

In London, the Foreign Office started a thorough review of Britain’s Russia policy, drawing on planners at the Ministry of Defence, the spooks of MI6, the spy-catchers of MI5, and other government experts. “Project Russia”, as the review was named, also invited selected outsiders (but not this columnist) to contribute. The process was secret and so is the result.

One aim was to nail down what motivates the Russian authorities: are they nationalists salving their country’s wounded pride, aggressive mercantilists, a criminal conspiracy of ex-spooks, or all, none or a mixture of the above? The other was to work out what Britain should do about it: contain, engage, counter-attack and ignore were among the options considered.

But hopes that the British establishment had finally decided to take a tough line have been dashed. Gordon Brown, the prime minister, wants above all to strengthen his alliance with the French president, Nicolas Sarkozy. Both men want to launch a big global financial reform. Mr Sarkozy wants the Nice summit this month to be a success, where he can declare that the EU is ready to relaunch talks with Russia. So Britain has switched sides and backed him, infuriating its former allies.

Critics say that Russia is not allowing EU monitors to operate in Georgia’s separatist enclaves of South Ossetia and Abkhazia. Russia has bolstered its military presence there to far above pre-war levels. The extra troops have not stopped the ethnic cleansing of many thousands of civilians from these territories.

So shouldn’t the EU at least maintain its modest freeze on relations with Russia until the end of the year? That might also give the West a bit more clout in efforts to persuade Georgia’s increasingly erratic president, Mikheil Saakashvili, to talk more to the opposition and less about a renewed military build-up. Those arguments apparently count for nothing with Mr Sarkozy—or with Mr Brown, who has flatly overruled his officials.

Britain is also neglecting its soft power in Russia. The BBC Russian service, already sadly diminished in listeners, transmitters, and editorial clout, is being pruned again, shedding eight staff (including, some fear, the journalists who are the sharpest critics of the Kremlin). Carefully crafted features will give way to cheaper phone-ins. A beefed-up website is some compensation—but most Russians, especially in the provinces, have no access to the internet. A protest letter from Britain’s best-known Russia-watchers is gathering signatures. Don’t get your hopes up.

And “Project Russia”? Its voluminous pages call for “robustness” and “resilience”. It recommends more British attention to countries threatened by Russia. That may be good news for Norway, for example, which feels its allies have failed to help in the “High North”.

The most interesting bit is probably the recommendation that Britain should actively seek out coalitions of like-minded countries to counter Russian mischief-making. But for this to work, Britain itself must look credible. Mr Brown’s cynical deal with Mr Sarkozy, and a sense of general squishiness on Russia lately, have created the opposite impression.

Monday, November 03, 2008

Russia, Georgia and the EU: Victory for the Kremlin?

So it is business as usual with Russia. And what a bad business it is. Britain's decision to allow France to lead the European Union back into normal relations with Vladimir Putin's ex-KGB regime in Russia is one of the most startling volte-faces in our country's recent diplomatic history. It has left our allies in Eastern Europe – Poland, the Czech Republic, Estonia, Latvia and Lithuania – aghast at our duplicity. "Our last European hope just ----ed us. We should have known. For we are but a small faraway country about which they know nothing," a senior official in the region wrote in a despairing email after The Daily Telegraph broke the news on Friday.

European unity after the war in Georgia was never terribly impressive – a mild public rebuke and the suspension of talks on a new "partnership and co-operation agreement" until Russia met the conditions of the loosely worded truce brokered by the French president, Nicolas Sarkozy.

Russia has met some of those conditions – but not all. EU monitors are still unable to inspect the war zone properly. If they could, they would see evidence of ethnic cleansing in the two separatist enclaves of South Ossetia and Abkhazia. They would also see that Russia has increased its military presence. The message to the Kremlin is clear: you can invade a neighbouring country, threaten Europe's energy supplies, and the EU will do nothing serious about it.

The reason is simple: Gordon Brown cares little about foreign affairs, but likes the idea of stitching up deals on the reform of international finance with his new friend Mr Sarkozy. France, which is running the EU until the end of the year, wants a triumph to present to the European summit in Nice this month. Showing that it has repaired relations with Russia is part of that. It will please all the pro-Russian countries in the EU. Russia's energetic cultivation of contacts in Germany, Italy, the Netherlands, Austria and France has built up a bridgehead of influence. Those in Whitehall who watch with alarm and disgust as parts of our establishment cosy up to rich and powerful Russians have been outmanoeuvred. The idea that the start of talks is balanced by a new, careful scrutiny of EU-Russian relations should fool nobody. This is surrender.

It must be especially humiliating for David Miliband, whose condemnation of Russia's actions, in a speech in the Ukrainian capital Kiev on August 27, inspired hopes from the Baltic to the Black Sea that Britain was now a champion of the ex-communist countries' freedom and security. He excoriated Russia's "unilateral attempt to redraw the map", calling it "the moment when countries are required to set out where they stand". This week's decision casts those words in a bitter light.

It is also part of a wider and gloomier picture. Even before the war in Georgia in August, Russia was bullying its neighbours, stitching up Europe's energy market and turning money into power across the continent. In the old Cold War, the Kremlin was shackled by communism. Now it has been turbo-charged by capitalism, through the boom in oil and gas prices that has brought it $1.3 trillion in extra revenues since 2000. That enables it to exercise influence not only on us, but among us, too. It has built up assets, commercial and human, in positions of power across Europe. German industry makes tens of billions of euros in the Russian market; Russia is Germany's main energy supplier. The former German chancellor Gerhard Schröder chairs the consortium building a Russian-German gas pipeline (conceived, in secret, while he was still running Germany).

Even though the EU is far stronger than Russia on paper, three times bigger in population terms, and more than 10 times larger as an economy, it seems unable to stand up to the Kremlin. The financial crisis has hit Russia hard – but it has hit us harder. A few years ago, threatening to freeze dodgy Russian companies out of the developed world's capital markets would have been a real threat. Now, if they find London, New York, and Frankfurt unwelcoming, they can turn to the exchanges in Dubai, Mumbai and Shanghai.

Nor does Russia greatly care if it is excluded from clubs such as the Council of Europe or the G8, or if talks on joining the World Trade Organisation or the Organisation for Economic Co-operation and Development are frozen. Such "punishments" may even reinforce the message of the ex-KGB regime to the Russian people: that their country is surrounded by malevolent hypocrites. The Kremlin's message to Europe is cold and confident: you need us more than we need you. President Dmitri Medvedev is proving as tough and tricky as his predecessor, Vladimir Putin. His new security plan is to end the Atlantic alliance, pushing America out of Europe and creating a new security regime in which the continent's biggest countries – chiefly Germany and Russia – will boss everyone else about.

It is not too late to fight back. Nato has already changed its approach. Belatedly, the alliance's top-secret military planning bureaucracy is working out how it could defend the Baltic states and Poland. Nato warplanes last week held air exercises over Estonia, while senior American commanders are paying frequent visits to the Baltic states.

That is encouraging, but it is not enough. There are other matters that need addressing urgently – including Russian spying. This has reached unprecedented levels, and is probably more dangerous and destructive to Western interests than during the old Cold War. A co-ordinated, wholesale expulsion of Russian intelligence officers and their hangers-on from, say, London, Stockholm, Oslo, Copenhagen and Warsaw would send a powerful message to the Kremlin.

The key to the West's future security is the security of the Baltic states. Estonians, Latvians and Lithuanians have thrown in their lot with us and we must not let them down. Consider this scenario. Imagine that Estonian extremists start intimidating local Russians (who amount to around a third of the Estonian population). Russia can easily stoke this covertly, while demanding publicly that Estonia crack down. Then imagine that Russian activists (again, backed, discreetly, by Moscow) set up "self-defence units" which start patrols, and set up checkpoints. When the Estonian authorities try to stop this, the Kremlin complains; Russian military "volunteers" start mustering across the border, proclaiming their intention to defend compatriots from "fascism". The Russian media report this with wild enthusiasm; the Russian authorities say they cannot indefinitely restrain the spontaneous patriotic sentiments of their citizens.

Suppose Estonia requests support under Article IV of the Nato charter. At this point, Russia's cultivation of assets in the West pays off. Germany, Italy and other big European countries tell Estonia to sort out its problems with Russia bilaterally. The result is a worse split in the Alliance even worse than the one over Iraq. Faced with the West's weakness, the Kremlin ups the odds. Estonia tries to restore order; Russia terms that an intolerable provocation and demands a change of government, immediate changes in the language and citizenship laws, and the establishment of what it calls a "Swiss solution": cantons in which Russians will be allowed "to run their own affairs". To back this up, Russian forces start military manoeuvres.

So what does Estonia do then? America may offer moral support, but is it going to risk a Third World War with Russia to protect Estonia? Such a course of events is not inevitable, or even likely. But it is not as preposterous as it should be. Too many of the ingredients are in place and the Kremlin is perfectly capable of cooking them into a dangerous dish. The big question for Estonia and its friends is what can be done to make sure that never happens.

The answer is not to give up on Nato but to complement it with a regional grouping. The existing Nordic ties between Sweden, Norway and Finland, boosted by support from Poland and Denmark, would put this scenario back where it belongs: in the world of geopolitical thrillers. Add in British, Canadian and American involvement and you would have a formidable counterweight to Russian mischief-making in both the Baltic and the Arctic – the likely hotspots of the new Cold War.

Edward Lucas is author of 'The New Cold War: How the Kremlin menaces both Russia and the West' (Bloomsbury). An updated edition is published thismonth.

New blog!

This site is no longer active. Please go to edwardlucas.com/blog instead

Regards

Edward

Bene Merito award

Without my foreknowledge, I was last year awarded the Bene Merito medal of the Polish Foreign Ministry. Although enormously honoured by this, I have sadly decided that I cannot accept it as it might give rise to at least the appearance of a conflict of interest in my coverage of Poland.

About me

"The New Cold War", first published in February 2008, is now available in a revised and updated edition with a foreword by Norman Davies. It has been translated into more than 15 foreign languages.
I am married to Cristina Odone and have three children. Johnny (1993, Estonia) Hugo (1995, Vienna) and Isabel (2003, London)